Western Michigan University
Health care is an important component of an economy that involves the provision of goods and services by both the private and public sectors, economic and other regulations, and public policies. As health care technologies have advanced rapidly in the past few decades and the demand for health care continues to grow, health care expenditures have been increasing steadily in industrialized nations. In the United States, for example, health care expenditures as a share of the gross national product (GNP) grew from 7.4 percent in 1970 to 9.3 percent in 1980, and to 12.4 percent in 1990. It reached more than 15 percent of the GNP in 1995. Changes in the health care supply and demand have prompted changes in health care finance, insurance, and service delivery. Health care reforms have become an ever-present subject in federal as well as state politics for the past decade. Although there have been no sweeping changes in legislation at the federal level, significant changes have been taking place in the health care sector.
The chapters in this volume address some important aspects of health care reforms, including Medicare reform, managed care and its effect on the health care system, efforts to cover the uninsured, the effect of health insurance on labor market and employment decisions, and the role of tax policy in health care in the past and the future. While conducting sound and solid economic analyses of health care issues, the authors of the chapters all recognize the political implications as well. This political economy approach puts the discussion of health care reforms in the proper perspective, since health care involves many stakeholders and its reforms inevitably have political as well as economic repercussions.
Medicare reform is central to health care reform efforts, because more than 39 million people currently get insurance and health care through Medicare. As Medicare is tax financed, its reform is extremely difficult economically, and politically as well. Len Nichols’s chapter explains these difficulties and contrasts two leading proposals for